KUALA LUMPUR: CIMB Equities Research is keeping Hap Seng PLANTATION []s as a Trading BUy at RM2.34 and a target price of RM2.85.
It said on Friday, Feb 12 Hap Seng's FY09 core net profit undershot its forecast by 8% but was 2% above consensus.
"As both production and selling prices were in line with our assumptions, the main source of the deviation was our underestimation of fertiliser costs. We were premature in assuming a reduction in its fertiliser costs in 4Q09," it said.
Despite the weaker results, the group maintained a final dividend of 5 sen, bringing FY09 net
dividend to 9 sen (FY08: 10 sen) above its forecast of 8.2 sen (gross: 10.75 sen) and representing a net dividend payout of 72%.
"We are keeping our earnings forecasts and target price of RM2.85, which is based on a target forward P/E of 15 times.
"Also intact is our TRADING BUY call predicated on our bullish view on CPO price in 1Q10, the group’s attractive P/Es relative to its peers and its strong dividend yields. Key re-rating catalysts are better-than-expected results, higher CPO price and M&A activities," said CIMB Research.